What Would You Estimate as the Cost of Equity If

question 73

Multiple Choice

What would you estimate as the cost of equity if a stock sells for $40,pays a $4.25 dividend,and is expected to grow at a constant rate of 5%?

• A) 17.46%
• B) 14.52%
• C) 12.69%
• D) 15.63%

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Definitions:

Joint Tenant

A form of co-ownership of property where two or more individuals hold equal shares and rights in the property, and upon the death of one owner, their share automatically transfers to the surviving co-owner(s).

Mortgage

A mortgage is a legal agreement by which a bank or creditor lends money at interest in exchange for taking the title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Possessory Interests

Refers to the legal right to control property, including the right to exclude others from it.

Registry System

An organized system or database for the official recording, tracking, and management of information or documents, such as land titles, births, marriages, or automobiles.